Key Terms and Concepts in Estate Planning

Key Terms and Concepts in Port St. Lucie Estate Planning

Grantor (also known as Trustor, Settlor, Trustmaker):

The grantor, also referred to as the trustor, settlor, or trustmaker, is the person who creates a trust.

This person conveys or re-titles their property to the name of the trust.

Trustee:

The trustee is the person responsible for managing assets titled in the name of the trust.

Commonly, the grantor(s) are named as initial trustees.

Successor Trustee:

The successor trustee is the person who manages the assets in the trust after the resignation, incapacity, or death of the initial trustee.

Beneficiary:

The beneficiary is the person who receives the benefit of the trust, and they serve as the grantor while living.

Specific Gift Beneficiary:

Individuals entitled to receive a specific item identified in the trust agreement upon the death of the grantor(s).

Residuary Beneficiary:

Individuals entitled to receive remaining trust assets upon the death of the grantors (anything not distributed to a specific gift beneficiary).

Primary Beneficiary:

Refers to the residuary beneficiary, first in line to receive trust assets.

Secondary Beneficiary (also known as Contingent Beneficiary):

Refers to an individual entitled to receive trust assets if the primary beneficiary is deceased.

Intestate:

To die without having created a last will and testament.

Testate:

To die after having created a last will and testament.

Testator:

An individual who makes a last will and testament.

Beneficiary or Heir:

An individual named in a last will and testament or a family member who receives an inheritance or bequest.

Specific Gift:

A gift of a particular item or a cash gift.

Residuary Gift:

A gift of whatever assets remain after all specific gifts have been distributed to beneficiaries and/or heirs.

Ademption:

The termination of a specific gift because the gifted item is no longer part of the estate and/or trust.

Pretermitted Heir:

A child or spouse unintentionally excluded from a will, such as an after-born child or the spouse of a marriage that took place after the decedent made the will.

Survivorship Options

Per Stirpes

Derived from the Latin term meaning “By the Root” or “Down the Line.” Shares are determined by number of children each beneficiary takes through the parent. All grandchildren will not necessarily receive an equal inheritance.

Per Capita “Per Head”

Shares determined by number of descendants at each generational level. Surviving children and the deceased child’s children (your grandchildren) would all receive an equal inheritance.

By Representation “By Generation”

Shares determined by number of descendants at first level with living descendants each beneficiary at the same generational level receives an equal interest. If all your children are deceased, all your grandchildren will receive an equal inheritance. Shares of all your predeceased children would be combined and divided equally among the next generation.